The central banking authority has formally removed Paytm Payments Bank Limited (PPBL) from its recognized roster of scheduled commercial institutions. According to information made public on Wednesday, the step follows the definitive revocation of the entity's banking authorization. The regulator had revoked the banking licence of PPBL in April this year on grounds of persistent non-compliance with statutory norms and governance standards.
Licence Cancelled in April Preceded Court Winding-Up Directive
On April 24 of this year, the central banking regulator issued a public notification confirming that the institution's operating licence stood cancelled. In its regulatory determination, the authority emphasized that the ongoing operations of the payment bank were being conducted in a manner detrimental to broader financial interests. Following that regulatory intervention, the Delhi High Court ordered the complete winding up and closure of Paytm Payments Bank Limited.
Gazette Notification Confirms Statutory De-Listing
The Reserve Bank stated that Paytm Payments Bank Limited has been removed from the Second Schedule of the Reserve Bank of India Act, 1934. The formal notification regarding this regulatory exclusion was executed on July 31, and it was subsequently published in the Gazette of India during the month of September. This gazette notification legally finalizes the termination of the bank's scheduled entity credentials.
Operational Significance of the RBI Second Schedule
The Second Schedule of the Reserve Bank of India Act comprises only those accredited banking institutions that consistently satisfy the strict prudential requirements and statutory capital thresholds set by the central regulator. Entities accorded this status are recognized as scheduled banks, which entitles them to specific liquidity facilities, operational accommodations, and clearing house privileges. Removal from this schedule marks the total forfeiture of these central banking accommodations and statutory recognitions.
History of Repeated Regulatory Interventions
The payments bank entity, owned by the fintech group One97 Communications, had repeatedly run afoul of regulatory oversight over the past several years. In March 2022, the supervisory authority prohibited the institution from onboarding fresh customers while mandating the appointment of an independent IT firm to conduct an extensive audit of its systems. Regulatory restrictions were tightened further on January 31, 2024, and February 16, 2024, barring the firm from accepting any fresh credit, deposits, or wallet top-ups across existing user accounts and prepaid instruments.
